Litigation Release No. 18182 / June 9, 2003
United States v. John R. Powell, Criminal Case No. CR 03-01172 (C.D. Cal.)
John R. Powell, Movie Producer And Former Stockbroker, Arrested For Lying To The SEC
On June 6, 2003, federal authorities arrested John R. Powell, former President of Irvine Securities, Inc. and currently a movie producer who co-owns Filmstar Productions, Inc., on a criminal complaint charging him with making false statements to the Securities and Exchange Commission. The complaint, filed on May 29, 2003, by the United States Attorney's Office for the Central District of California, charges Powell with making false statements to a federal agency, in violation of Title 18, United States Code, Section 1001. An affidavit filed in support of the complaint alleges that during late 2001 and 2002, Powell's attorney discussed with the Commission possible resolution of a civil case filed by the Commission against Mr. Powell and others. During the course of settlement discussions, Powell sought waiver of the amount of disgorgement and submitted two sworn financial statements, dated January 2002 and July 2002. The affidavit alleges that in each of the financial statements, Powell claimed he had no equity in his Laguna Beach house because his mortgage was exactly equal to the property's "quick sale" market value.
The affidavit further alleges that when the Commission obtained Powell's credit report in approximately August 2002, the Commission learned that Powell had refinanced his Laguna Beach home in February 2002. Through that refinancing Powell borrowed $1,750,000, and received a check in the amount of $428,378.85. Powell deposited the money into the account of Filmstar Productions, Inc., a company Powell co-owns and operates. Since then, Powell has signed checks on the Filmstar account made payable to himself and others. According to the affidavit, the financial statements submitted to the Commission did not disclose that Powell had refinanced his Laguna Beach house in February 2002 to withdraw more than $428,000 in cash from the property. Nor did the financial statements disclose that Powell transferred this cash to Filmstar. Nor did they identify the transfer of money to Filmstar as a loan from Powell.
On October 10, 2002, in an action brought by the Commission, the United States District Court for the Central District of California entered an injunction prohibiting Powell from violating the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.
For additional information, see Litigation Release No. 15822.